Coal heading out of Sparwood. Phil McLachlan/The Free Press/File

Coal markets remain volatile; demand for thermal declines, metallurgical remains strong

According to Teck, demand for seaborne steel making coal was strong through the second quarter

By James Snell –

Moodys, one of the world’s largest credit rating agencies, has downgraded the outlook for thermal North American coal from ‘stable’ to ‘negative’. The 12-18 month projection suggested problems with reduced demand, profitability, and low export prices.

Moody’s price-range for coal exports is unchanged: $60-$90/metric tonne for Newcastle thermal coal and $110-$170/metric tonne for high-quality metallurgical coal.

In March 2019, Bloomberg reported, “China remains key to the outlook for the thermal coal market but ongoing policy uncertainty is keeping miners on edge and forecasters guessing about what’s next from the world’s biggest coal consumer.”

According to Statistics Canada, Canadian coal production in 2018 was 62.3 million tonnes – worth approximately $7.5 billion. Canada exported 34 million tonnes and imported 7.6 million tonnes. Canada is the world’s third largest exporter of metallurgical coal, after Australia and the United States. Alberta and British Columbia produce 85 per cent of Canada’s coal.

Chris Stannell, Public Relations Manager with Teck Resources, said the outlook for local mines is good.

“This [Moody’s] sector outlook refers to the thermal coal market, which is coal used for energy generation,” he said. “This does not relate to Teck or our operations in the Elk Valley, as we produce steelmaking coal, which is used in the production of steel.”

Stannell added, “Looking at steelmaking coal, demand for seaborne steel making coal was strong through the second quarter, supported by continued steel-capacity growth in India and Southeast Asia, and the relocation of steel production to coastal areas in China.”

Matt Preston, Research Director – North America Thermal Coal Markets at Wood Mackenzie said that thermal coal markets are in “structural decline” while the metallurgical coal market has a more positive outlook.

“The price of natural gas is low,” he said. “That means the demand for thermal coal has dropped off. However, the metallurgical coal market is more dependent on economic activity and manufacturing.”

The Wood Mackenzie website stated that “The coal market has entered an extremely volatile period after years of oversupply, slowing capital investment and weak global demand. The impact of Chinese policy on its large domestic industry has caused a rollercoaster effect in the smaller seaborne market. Metallurgical coal prices were particularly affected – thermal coal prices less so, but Chinese policy was still a significant influence.

“In a market environment such as this, it’s more important than ever to stay ahead. But how can you interpret demand sustainability when competition with other fuels is a key factor? And how can you maximize the return from your investments in the coal industry when it has been downsizing?”

Just Posted

PROFILE: Stetski running for NDP in Kootenay-Columbia

Regional NDP candidate was first elected to federal office four years ago

Fernie kids triathlon 2019 a great success

James Snell - The ninth annual Fernie Kids Triathlon was a… Continue reading

City commissions another fire hall roof study

Fernie City Council has authorized staff to reallocate the existing budget from… Continue reading

Pride Festival just around the corner

The Fernie and Elk Valley Pride Festival is just around the corner,… Continue reading

Kootenay Learning Campus opens in Fernie

School District 5 celebrated the grand opening and ribbon cutting of the… Continue reading

VIDEO: ‘Thrones,’ ‘Fleabag’ top Emmys

Billy Porter makes history as first openly gay black man to win best drama-series acting Emmy

Avalanche workshop coming soon to Fernie

Submitted, EVSAW Fernie will play host to the second annual CIL Explosives… Continue reading

“Killer of neighbourhoods” petition circulates

James Snell - Several residents on 4th Avenue are circulating a… Continue reading

B.C. VIEWS: School officials join fact-free ‘climate strike’

Students, public get distorted picture of greenhouse gases

Judge rules cops did not coerce statement from B.C. man accused of assaulting sex worker

Defence wanted Vernon’s Curtis Sagmoen’s video interview with police deemed inadmissible

GRAPHIC: Tortured cat found with string around its neck in Kelowna alleyway

City crews have been contacted and are on the way to pick up the dead feline.

Firefighters may be needed for paramedic apartment access, experts say

Better coordination recommended in urban B.C. 9-1-1 calls

Fernie Fire Department celebrates FireSmart education

“The greatest safety is a neighbourhood that is FireSmart,” said Alan Westhaver.

Trails in Fernie’s Ridgemont area reopen

Fernie Trails Alliance urging trail users to abide by and obey closures still in place

Most Read